One of the comments to my "What is Success?" blog entry referenced the fortitude it takes to 'go the distance' in business, especially in a start-up. This is a common theme as it NEVER goes according to 'the plan'. So, here is a story. I started my first business in 1997. It was called SECURESHRED and it was a document shredding company. Right before I opened the doors a friend of mine somehow got a VC to give my business plan a look and then give me 30 minutes of his precious time. And I am not trying to sound sarcastic here, I was truly this guys community service for the week (or month). We sat down and he asked me to explain SECURESHRED to him and he quized me. After about 20 minutes he looked at me and said "Colin I don't know if you are going to be successful or not. I don't know beans about your business and furthermore your business is too local for us to consider. So, here is what I can tell you...No matter how good your business plan is, no matter how great you are, no matter how well you have thought through every detail about how to grow SECURESHRED into a successful business...there is ONE thing I can tell you for sure. Here it is; one of two things is going to happen. Growing this business is either going to take twice as long and three times as much money OR three times as long and twice as money as you ever thought or imagined. If I were you I would start planning for that inevitability right now because I promise you it's going to happen."
Well, at 26 years old I thought this jaded, pompous guy was talking down to me and sure as hell didn't like it. But you know what? He was right. It took twice as long and three times the cash. I worked like a dog for three years till I sold it to a national consolidator in May of 2001. There was 18 months when I didn't think I could make it. My house, my car, my everything was in hock. I had to fight to keep my head from spinning on a daily basis. Six days a week and no vacation for three years. Then we grew by 650% a year the last two years we existed as SECURESHRED.
"There is a very, very thin dividing line between survival and failure. You've just got to fight and fight and fight and fight to survive." Richard Branson, Forbes 2006
That VC and I are friends now and I have seen "The Rule of 32" referred to and written about countless times since then. I don't think there is an exception to the rule if the entrepreneur is honest. I am sure that if you asked the founders of Facebook, Salesforce.com or Motricity (I know this one for sure) they all will tell you "'Oh yeah, we thought we would be a LOT bigger by now', 'we were going through money like water going over Niagara Falls', or 'all of the sudden we were not sure how to make it happen'". So, what does it take to go the distance? One of the things it takes to be able to stare the Rule of 32 in the face and know you are going to go through hell for a while. It always takes longer. It is always harder. It always takes more money than you ever thought in your "realistic" plans, hopes and dreams. Call it sticktoitiveness. Call it gumption and inner fortitude. Whatever. You got to have it. Laser focus and peripheral vision at the same time...or what I call Entrepreneurial Peripheral Vision doesn't hurt either. Alas, a subject for another blog.
January 15, 2009
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2 comments:
Good topic. I like how you wrote it up.
The words "easy" and "just" (as in, "if we could just get 1% of the market") are big red flags for me. We hear them all the time from people who think even large web projects require little more than some Mountain Dew and a laptop. Those words implicitly diminish the value of our time and expertise. Likewise they imply that the speaker either doesn't respect our business or has not been around the block enough times. Thankfully, it's usually the latter.
After planning and executing numerous projects for clients, I am acutely aware of this rule of 32 (though I've never done the math to see if those factors are accurate though). Rarely does a project go according to plan and even when we think we've accounted for the rule of 32, we often come up shorter than we thought.
All this reminds me of a blog post I made about a year ago, Be Skeptical of Everything Labeled as Easy, in which I cited Hofstadters Law. Seems your VC friend was familiar with Hofstadter's Law in 1997, two years before it was given a name.
Evan,
Thank you for your thoughtful comment and thanks for reading. Awesome.
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